In re SHELBY L. LACKEY

 
 UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 94426 / March 16, 2022  
 
ACCOUNTING AND AUDITING ENFORCEMENT 
Release No. 4289 / March 16, 2022  
 
ADMINISTRATIVE PROCEEDING 
File No. 3-20800 
 
 
 
 
In the Matter of 
 
SHELBY L. LACKEY, CPA,  
 
Respondent. 
 
 
 
 
                 
 
ORDER INSTITUTING PUBLIC 
ADMINISTRATIVE PROCEEDINGS 
PURSUANT TO SECTION 4C OF THE 
SECURITIES EXCHANGE ACT OF 1934 
AND RULE 102(e) OF THE COMMISSION’S 
RULES OF PRACTICE, MAKING 
FINDINGS, AND IMPOSING REMEDIAL 
SANCTIONS  
  
   
 
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate that public 
administrative proceedings be, and hereby are, instituted against Shelby L. Lackey, CPA 
(“Lackey” or “Respondent”) pursuant to Sections 4C
1
 of the Securities Exchange Act of 1934 
(“Exchange Act”) and Rule 102(e)(1)(ii) of the Commission’s Rules of Practice.
2
 
                                                 
1
  Section 4C provides, in relevant part, that:  
 
 The Commission may censure any person, or deny, temporarily or permanently, to any person the 
privilege of appearing or practicing before the Commission in any way, if that person is found . . . 
(1) not to possess the requisite qualifications to represent others; (2) to be lacking in character or 
integrity, or to have engaged in unethical or improper professional conduct; or (3) to have willfully 
violated, or willfully aided and abetted the violation of, any provision of the securities laws or the 
rules and regulations issued thereunder. 
 
2
  Rule 102(e)(1)(ii) provides, in pertinent part, that: 
 

2 
II. 
 
In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings 
herein, except as to the Commission’s jurisdiction over her and the subject matter of these 
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Public 
Administrative Proceedings Pursuant to Section 4C of the Securities Exchange Act of 1934 and 
Rule 102(e) of the Commission’s Rules of Practice, Making Findings, and Imposing Remedial 
Sanctions (“Order”), as set forth below.   
 
III. 
 
 On the basis of this Order and Respondent’s Offer, the Commission finds
3
 that:  
 
A. SUMMARY 
 
1. In 2017, Crosby Independent School District and its then-CFO engaged in a 
fraudulent scheme to overstate the District’s General Fund reserves and understate payroll and 
construction liabilities totaling $11.7 million.  In January 2018, Crosby issued $20 million of 
municipal bonds.  The Official Statement attached Crosby’s fiscal year 2017 audited financial 
statements that misstated the payroll and construction liabilities.  When this misconduct was 
discovered, Crosby declared financial exigency and the bonds were downgraded.   
 
2. Lackey was the audit partner responsible for the audit of Crosby for the fiscal year 
2017.  In that capacity, Lackey failed to comply with Generally Accepted Auditing Standards 
(“GAAS”)  during the planning and performance of Crosby’s fiscal year 2017 audit.  Specifically, 
Lackey failed to perform critical audit procedures necessary to verify the accuracy of Crosby’s 
payroll and construction liability.  She (1) failed to obtain sufficient appropriate audit evidence to 
support the audit opinion; (2) failed to properly supervise the audit; and (3) failed to exercise 
professional judgment and maintain professional skepticism.  These numerous audit failures 
significantly reduced the audit team’s ability to detect Crosby’s fraud. 
 
3. Notwithstanding these audit failures, Lackey approved and issued an audit report 
for fiscal year 2017 stating that the audit was performed in accordance with generally accepted 
                                                 
 The Commission may . . . deny, temporarily or permanently, the privilege of appearing or 
practicing before it . . . to any person who is found . . . to have engaged in unethical or improper 
professional conduct. 
 
  
 
3
   The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on any 
other person or entity in this or any other proceeding.  

3 
auditing standards
4
 (“GAAS”).  This statement was false as the audit was not performed in 
accordance with GAAS. 
 
4. As a result of this conduct, Lackey engaged in improper professional conduct 
within the meaning of Section 4C(a)(2) of the Exchange Act and Rule 102(e)(1)(ii) of the 
Commission’s Rules of Practice (“Rule 102(e)”).    
 
B. RESPONDENT 
 
5. Shelby L. Lackey, age 48, of Conroe, Texas, is a Certified Public Accountant 
(“CPA”) licensed to practice in Texas.  Lackey became a partner in a national audit firm (“Outside 
Audit Firm”) in 2017.  Lackey served as the engagement partner on, and had final audit 
responsibility over, Crosby’s fiscal year 2017 audit engagement.  In spring 2020, Lackey left the 
Outside Audit Firm to become CFO for another school district.   
 
C. OTHER RELEVANT ENTITY AND INDIVIDUAL 
 
6. Outside Audit Firm is a certified public accounting firm registered with the Public 
Company Accounting Oversight Board.  Outside Audit Firm was the auditor for Crosby’s fiscal 
year 2017 and 2018 financial statements.   
 
7. Crosby Independent School District is a public school district based in Crosby, 
Texas, a suburb located northeast of Houston, Texas.  Crosby operates seven schools and serves 
approximately 6,400 students.  Crosby operates on a July 1 to June 30 fiscal year.   
 
D. FACTS 
 
Crosby’s Deteriorating Financial Condition and Change to Fiscal Year End 
 
8. In 2013, Crosby issued $86.5 million in municipal bonds (“2013 Bond”) to fund 
several capital projects.  Various project enhancements beyond the original scope of work, 
however, inflated the total cost of the projects.  Consequently, the 2013 Bond proceeds were 
prematurely exhausted in fiscal year 2016 leaving the General Fund as the only source of funding 
for approximately $12 million of remaining construction commitments.  
 
9.  As of August 31, 2016 (Crosby’s then fiscal year-end) the District’s General Fund 
lacked sufficient funds to cover the $12 million of unanticipated construction expenses required to 
complete its capital projects.  As a result, Crosby pursued two options to pay for the remaining 
construction costs: (1) Crosby changed its fiscal year-end date from August 31 to June 30, and (2) 
Crosby issued new municipal bonds.  
 
10. Lackey, who had participated in the Crosby audits since fiscal year 2014, was the 
engagement partner for Crosby’s fiscal year 2017 audit.  She knew that the General Fund was 
                                                 
4   Generally accepted auditing standards for audits of entities not subject to the oversight authority of the 
Public Company Accounting Oversight Board (PCAOB) are promulgated by the AICPA. 

4 
liable for $12 million of remaining construction commitments, that Crosby had changed its fiscal 
year-end date, and had planned to issue new municipal bonds to pay for the additional expenses.  
The District’s inability to pay for its outstanding construction commitments and proposed remedies 
were unique issues during Crosby’s fiscal year 2017 audit and, therefore, merited an elevated level 
of scrutiny, professional judgment, and professional skepticism.  However, Lackey failed to 
perform appropriate audit procedures during the fiscal year 2017 to form a basis for the auditor’s 
opinion that the financial statements were presented fairly, in all material respects, in accordance 
with Generally Accepted Accounting Principles (“GAAP”). 
 
Audit of Crosby’s Fiscal Year 2017 Financial Statements 
 
11. Crosby’s fiscal year 2017 financial statements materially understated liabilities and 
overstated the General Fund balance due to two significant failures: (1) failure to record 
construction expenses for completed capital projects, and (2) failure to record payroll expenses for 
unpaid teachers’ salaries.  During Crosby’s fiscal year 2017 audit, Lackey failed to properly verify 
and corroborate Crosby’s construction and payroll liability.  Notwithstanding these audit 
deficiencies, Lackey approved the issuance of Crosby’s fiscal year 2017 audit report which 
contained an unmodified opinion. 
 
Construction Expenses Understated by $7.9 Million  
 
12. During Crosby’s fiscal year 2017 audit, Lackey knew or should have known that 
the 2013 Bond proceeds had been completely consumed and Crosby would have to pay the 
remaining construction commitments from its General Fund.  Lackey also knew or should have 
known that Crosby’s capital projects had been substantially completed and that Crosby’s General 
Fund lacked sufficient funds to pay the estimated $8-$10 million in unpaid construction invoices.  
On June 26, 2017, Lackey attended a call with Crosby and Crosby’s bond counsel and financial 
advisor.  On that call, Crosby and its financial advisor confirmed that the District could not pay for 
its unpaid construction liabilities without issuing new bonds.  
 
13. Lackey’s audit procedures on Crosby’s fiscal year 2017 construction expenses were 
deficient.  First, Lackey only obtained from Crosby one invoice indicating that Crosby owed 
$727,000 to its construction vendor.  Lackey, however, knew or should have known that Crosby’s 
unpaid construction liabilities were significantly higher.  Lackey also misinterpreted a critical line 
on the invoice titled “Previous Certificates for Payment” to mean total amounts paid.  Consistent 
with its description, however, that line did not represent total amounts paid but rather the aggregate 
amount of previously submitted invoices (representing actual work completed) regardless of 
Crosby’s payment history.   
 
14. Additionally, Lackey’s search for unrecorded liabilities was deficient and did not 
follow the Outside Audit Firm’s firm-wide guidance.  Lackey only reviewed a list of checks 
written, not a list of all disbursement types, such as wires and ACH payments.  If the audit team 
had searched all disbursement types for unrecorded liabilities, Lackey would have discovered $1.5 
million of progress payments toward Crosby’s outstanding construction payables in September 
2017 alone.  This amount exceeded the $727,000 recorded in the fiscal year financial statements, 

5 
which should have alerted Lackey that the construction liability was recorded incorrectly.  Lackey 
failed to corroborate and obtain an appropriate understanding of Crosby’s outstanding construction 
liabilities.  Finally, Lackey failed to verify any payments from Crosby to its construction 
contractors prior to the conclusion of fiscal year 2017.  As a result, Lackey inaccurately concluded 
that Crosby only owed $727,000 to its construction vendors as of June 30, 2017.   
 
Payroll Expenses Understated by $3.8 million 
 
15. Crosby’s teacher salaries represent a majority of the District’s expenses. Teachers 
earn their salaries over a 10-month contract period corresponding with the start and end of the 
school year, though they are paid evenly over a 12-month period ending in mid-August.  Crosby 
was not required to record a payroll liability for teacher salaries when its fiscal year-end was 
August 31 because all teacher contracts had been paid in full as of that date.  When Crosby moved 
its fiscal year-end date from August 31 to June 30, however, Crosby concluded fiscal year 2017 
with unpaid payroll liabilities related to the 2017 contract year (amounts paid in July 2017 and 
August 2017).  Crosby failed to include these unpaid payroll liabilities in its fiscal year 2017 
financial statements. 
 
16. Lackey’s audit procedures on Crosby’s fiscal year 2017 payroll expenses were 
deficient.  Crosby’s change in fiscal year-end date merited a heightened sense of scrutiny,  
professional judgment and professional skepticism.  However, Lackey failed to perform 
appropriate audit procedures over Crosby’s outstanding payroll liabilities.  First, Lackey failed to 
corroborate Crosby’s then-CFO’s alleged representation that a payroll liability for teachers’ 
salaries was unnecessary because all teachers had been paid in full as of June 30, 2017.  Second, 
Lackey failed to recognize that the CFO’s alleged representation regarding teachers’ salaries 
contradicted other audit evidence.  For example, Crosby’s payroll policies and procedures state that 
all employees’ (10-month, 11-month, and 12-month) salaries are evenly spread over 12 months (a 
common practice in the Texas public school system and well-known to Lackey).  Third, Lackey 
failed to detect the payroll liability error because of poorly designed subsequent disbursement 
testing that did not include all payment types. 
 
Crosby’s Declaration of Financial Exigency, Rating Downgrades, and Restatement 
 
17. During spring 2018, Crosby continued to face cash flow shortages because of the 
additional construction expenses described above.  In June 2018, Crosby’s new CFO discovered 
the payroll liability and construction liability errors and confronted Lackey, who was overseeing 
the audit of Crosby’s 2018 fiscal year.  Lackey admitted to the new CFO that she missed the 
payroll liabilityduring the fiscal year 2017 audit.   
 
18. In August 2018, Crosby’s leadership disclosed the financial issues to its Board and 
the public and began crafting a financial recovery plan with its financial advisor.  Beginning in 
September 2018, ratings agencies downgraded Crosby’s bonds. 
 
19. On October 8, 2018, Crosby declared a financial exigency and implemented a mid-
year reduction in force.  In February 2019, the Outside Audit Firm issued its audit report for 

6 
Crosby’s fiscal year 2018 financial statements, which included material restatements of the fiscal 
year 2017 ending balances.    
 
Failure to Obtain Sufficient Appropriate Audit Evidence 
 
20. GAAS require the auditor to design and perform audit procedures that are 
appropriate in the circumstances for the purpose of obtaining sufficient appropriate audit evidence 
(AU-C §500).  Lackey failed to obtain sufficient appropriate audit evidence during Crosby’s fiscal 
year 2017 audit in multiple areas. 
 
21. First, Lackey failed to obtain sufficient appropriate audit evidence to confirm the 
completeness and accuracy of Crosby’s fiscal year 2017 construction liabilities.  Lackey only 
reviewed one pay application from Crosby’s construction vendor and incorrectly interpreted a 
critical line item to represent the total amount due to that vendor.  Lackey also failed to adequately 
perform a search for unrecorded liabilities by only reviewing checks written rather than all 
disbursement types such as wire and ACH payments.  Finally, Lackey failed to corroborate and 
obtain an appropriate understanding of Crosby’s outstanding construction liabilities. 
 
22. Second, Lackey failed to obtain sufficient appropriate audit evidence to confirm the 
completeness and accuracy of Crosby’s fiscal year 2017 payroll accrual.  Crosby’s payroll 
expenses represent a majority of its annual budget and, therefore, should have been a primary area 
of focus during the fiscal year 2017 audit.  However, Lackey failed to corroborate Crosby’s CFO’s 
representations that contractual employees had been paid in full as of June 30, 2017.  Lackey also 
failed to detect the payroll liability error because of poorly designed subsequent disbursement 
testing that did not include all payment types.  Finally, Lackey failed to recognize and further 
investigate contradicting audit evidence between Crosby’s documented payroll procedures 
affirming annualized pay for contractual employees and the CFO’s representations that contractual 
employees had been paid in full.  
 
Failure to Properly Supervise the Audit 
 
23. GAAS require the engagement partner to take responsibility for the overall quality 
of each audit.  To comply with this requirement, the engagement partner is responsible for, among 
other things, directing, supervising and performing the audit in compliance with professional 
standards and ensuring that the auditor’s report is appropriate in the circumstances (AU-C §220). 
 
24. Lackey, in her role as engagement partner, failed to properly supervise Crosby’s 
fiscal year 2017 audit.  Lackey failed to ensure that the procedures performed by the audit team 
complied with GAAS.  For example, Lackey failed to corroborate representations by Crosby’s 
then-CFO related to Crosby’s payroll and construction liabilities.  Lackey also failed to ensure that 
the audit team properly tested Crosby’s cash disbursements subsequent to year-end to confirm the 
completeness and accuracy of Crosby’s payroll and construction liabilities. 
 
Failure to Exercise Professional Judgment and Maintain Professional Skepticism 
 

7 
25. GAAS require the auditor to exercise professional judgment and maintain 
professional skepticism during the planning and performance of an audit (AU-C §200).  
Professional skepticism is an attitude that includes a questioning mind, being alert to conditions 
that may indicate possible misstatement due to fraud or error, and a critical assessment of audit 
evidence. 
 
26. Lackey failed to exercise professional judgment and maintain professional 
skepticism during the planning and performance of Crosby’s fiscal year 2017 audit.  As previously 
discussed, Lackey failed to exercise professional judgment and maintain professional skepticism 
with respect to Crosby’s change in fiscal year-end date and deteriorating financial condition.  All 
of these issues merited a heightened sense of due professional care and professional skepticism.  
However, Lackey failed to acknowledge these areas in need of additional oversight, and she also 
failed to sufficiently perform required audit procedures.  Additionally, Lackey failed to exercise 
professional judgment and maintain professional skepticism by failing to address contradictions 
between the District’s documented payroll procedures and representations from its then-CFO that 
all contractual employees had been paid in full. 
 
E.  VIOLATIONS  
 
27. Section 4C of the Exchange Act and Rule 102(e)(1)(ii) of the Commission’s Rules 
of Practice provide, in pertinent part, that the Commission may censure or deny, temporarily or 
permanently, the privilege of appearing or practicing before the Commission to any person who is 
found by the Commission to have engaged in improper professional conduct.  Section 4C(b)(2) 
and Rule 102(e)(1)(iv)(B) define improper professional conduct to include the following two types 
of negligent conduct: (1) a single instance of highly unreasonable conduct that results in a violation 
of applicable professional standards in circumstances in which an accountant, a registered public 
accounting firm, or associated person knows, or should know, that heightened scrutiny is 
warranted; or (2) repeated instances of unreasonable conduct, each resulting in a violation of 
applicable professional standards, that indicate a lack of competence to practice before the 
Commission. 
 
28. Based on the foregoing, the Commission finds that Lackey engaged in improper 
professional conduct pursuant to Section 4C(a)(2) of the Exchange Act and Rule 102(e)(1)(ii) of 
the Commission’s Rules of Practice. 
 
F.  UNDERTAKING 
 
29. Lackey undertakes that she shall not serve as the engagement manager, engagement 
partner, or engagement quality control reviewer in connection with any audit expected to be posted 
in the MSRB’s Electronic Municipal Market Access system (“EMMA”) until reinstated to appear 
before the Commission as an independent accountant. 
 
30. In determining whether to accept the Offer, the Commission has considered 
Lackey’s undertaking. 
  

8 
IV. 
 
 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
agreed to in Lackey’s Offer. 
 
 Accordingly, it is hereby ORDERED, effective immediately, that: 
 
 A. Lackey is denied the privilege of appearing or practicing before the Commission as 
an accountant.   
 
B. After three years from the date of the Order, Lackey may request that the 
Commission consider her reinstatement by submitting an application to the attention of the Office 
of the Chief Accountant. 
 
C. In support of any application for reinstatement to appear and practice before the 
Commission as a preparer or reviewer, or a person responsible for the preparation or review, of 
financial statements of a public company to be filed with the Commission, other than as a member 
of an audit committee, as that term is defined in Section 3(a)(58) of the Exchange Act, Lackey 
shall submit a written statement attesting to an undertaking to have Lackey’s work reviewed by the 
independent audit committee of any public company for which Lackey works or in some other 
manner acceptable to the Commission, as long as Lackey practices before the Commission in this 
capacity and will comply with any Commission or other requirements related to the appearance 
and practice before the Commission as an accountant. 
 
D. In support of any application for reinstatement to appear and practice before the 
Commission as a member of an audit committee, as that term is defined in Section 3(a)(58) of the 
Exchange Act, as a preparer or reviewer, or as a person responsible for the preparation or review, 
of any public company’s financial statements that are filed with the Commission, Lackey shall 
submit a statement prepared by the audit committee(s) with which Lackey will be associated, 
including the following information: 
 
1. A summary of the responsibilities and duties of the specific audit committee(s) 
with which Lackey will be associated; 
 
2. A description of Lackey’s role on the specific audit committee(s) with which 
Lackey will be associated; 
 
3. A description of any policies, procedures, or controls designed to mitigate any 
potential risk to the Commission by such service;   
 
4. A description relating to the necessity of Lackey’s service on the specific audit 
committee; and 
 
5. A statement noting whether Lackey will be able to act unilaterally on behalf of 
the Audit Committee as a whole.  

9 
 
E. In support of any application for reinstatement to appear and practice before the 
Commission as an independent accountant (auditor) before the Commission, Lackey must be 
associated with a public accounting firm registered with the Public Company Accounting 
Oversight Board (the “PCAOB”) and Lackey shall submit the following additional information: 
 
1. A statement from the public accounting firm (the “Firm”) with which Lackey is 
associated, stating that the firm is registered with the PCAOB in accordance 
with the Sarbanes-Oxley Act of 2002; 
 
2. A statement from the Firm with which the Lackey is associated that the Firm 
has been inspected by the PCAOB and that the PCAOB did not identify any 
criticisms of or potential defects in the Firm’s quality control system that would 
indicate that Lackey will not receive appropriate supervision; and 
 
3. A statement from Lackey indicating that the PCAOB has taken no disciplinary 
actions against Lackey since seven (7) years prior to the date of the Order other 
than for the conduct that was the basis for the Order. 
 
F. In support of any application for reinstatement, Lackey shall provide documentation 
showing that Lackey is currently licensed as a certified public accountant (“CPA”) and that Lackey 
has resolved all other disciplinary issues with any applicable state boards of accountancy.  If 
Lackey is not currently licensed as a CPA, Lackey shall provide documentation showing that 
Lackey’s licensure is dependent upon reinstatement by the Commission.   
 
G.  In support of any application for reinstatement, Lackey shall also submit a signed 
affidavit truthfully stating, under penalty of perjury:  
 
1. That Lackey has complied with the Commission suspension Order, and with 
any related orders and undertakings, including any orders in this proceeding, or 
any related Commission proceedings, including any orders requiring payment 
of disgorgement or penalties; 
 
2. That Lackey undertakes to notify the Commission immediately in writing if any 
information submitted in support of the application for reinstatement becomes 
materially false or misleading or otherwise changes in any material way while 
the application is pending; 
 
3. That Lackey, since the entry of the Order, has not been convicted of a felony or 
a misdemeanor involving moral turpitude that would constitute a basis for a 
forthwith suspension from appearing or practicing before the Commission 
pursuant to Rule 102(e)(2);   
 
4. That Lackey, since the entry of the Order: 
 

10 
(a) has not been charged with a felony or a misdemeanor involving 
moral turpitude as set forth in Rule 102(e)(2) of the 
Commission’s Rules of Practice, except for any charge 
concerning the conduct that was the basis for the Order; 
 
(b) has not been found by the Commission or a court of the United 
States to have committed a violation of the federal securities 
laws, and has not been enjoined from violating the federal 
securities laws, except for any finding or injunction concerning 
the conduct that was the basis for the Order;   
 
(c) has not been charged by the Commission or the United States 
with a violation of the federal securities laws, except for any 
charge concerning the conduct that was the basis for the Order; 
 
(d) has not been found by a court of the United States (or any 
agency of the United States) or any state, territory, district, 
commonwealth, or possession, or any bar thereof to have 
committed an offense (civil or criminal) involving moral 
turpitude, except for any finding concerning the conduct that 
was the basis for the Order; and 
 
(e) has not been charged by the United States (or any agency of the 
United States) or any state, territory, district, commonwealth, or 
possession, civilly or criminally, with having committed an act 
of moral turpitude, except for any charge concerning the conduct 
that was the basis for the Order. 
 
5. That Lackey’s conduct is not at issue in any pending investigation of the 
Commission’s Division of Enforcement, the PCAOB’s Division of 
Enforcement and Investigations, any criminal law enforcement 
investigation, or any pending proceeding of a State Board of Accountancy, 
except to the extent that such conduct concerns that which was the basis for 
the Order. 
 
6. That Lackey has complied with any and all orders, undertakings, or other 
remedial, disciplinary, or punitive sanctions resulting from any action taken 
by any State Board of Accountancy, or other regulatory body. 
 
H.  Lackey shall also provide a detailed description of: 
 
1. Lackey’s professional history since the imposition of the Order, including  
 
(a) all job titles, responsibilities and role at any employer; 
 

11 
(b) the identification and description of any work performed for 
entities regulated by the Commission, and the persons to whom 
Lackey reported for such work; and  
 
2. Lackey’s plans for any future appearance or practice before the Commission. 
 
 I. The Commission may conduct its own investigation to determine if the foregoing 
attestations are accurate. 
 
J.    If Lackey provides the documentation and attestations required in this Order and 
the Commission (1) discovers no contrary information therein, and (2) determines that Lackey 
truthfully and accurately attested to each of the items required in Lackey’s affidavit, and the 
Commission discovers no information, including under Paragraph I, indicating that Lackey has 
violated a federal securities law, rule or regulation or rule of professional conduct applicable to 
Lackey since entry of the Order (other than by conduct underlying Lackey’s original Rule 102(e) 
suspension), then, unless the Commission determines that reinstatement would not be in the public 
interest, the Commission shall reinstate Lackey for cause shown. 
 
K. If Lackey is not able to provide the documentation and truthful and accurate 
attestations required in this Order or if the Commission has discovered contrary information, 
including under Paragraph I, the burden shall be on Lackey to provide an explanation as to the facts 
and circumstances pertaining to the matter setting forth why Lackey believes cause for 
reinstatement nonetheless exists and reinstatement would not be contrary to the public interest.  
The Commission may then, in its discretion, reinstate the Lackey for cause shown.   
 
L.  If the Commission declines to reinstate Lackey pursuant to Paragraphs J and K, it 
may, at Lackey’s request, hold a hearing to determine whether cause has been shown to permit 
Lackey to resume appearing and practicing before the Commission as an accountant. 
 
 
 By the Commission. 
 
 
 
Vanessa A. Countryman 
Secretary 
 
 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 94426 / March 16, 2022  

 

ACCOUNTING AND AUDITING ENFORCEMENT 

Release No. 4289 / March 16, 2022  

 

ADMINISTRATIVE PROCEEDING 

File No. 3-20800 

 

 

 

 

In the Matter of 

 

SHELBY L. LACKEY, CPA,  

 

Respondent. 

 

 

 

 

                 

 

ORDER INSTITUTING PUBLIC 

ADMINISTRATIVE PROCEEDINGS 

PURSUANT TO SECTION 4C OF THE 

SECURITIES EXCHANGE ACT OF 1934 

AND RULE 102(e) OF THE COMMISSION’S 

RULES OF PRACTICE, MAKING 

FINDINGS, AND IMPOSING REMEDIAL 

SANCTIONS  

  

   

 

I. 
 

 The Securities and Exchange Commission (“Commission”) deems it appropriate that public 

administrative proceedings be, and hereby are, instituted against Shelby L. Lackey, CPA 

(“Lackey” or “Respondent”) pursuant to Sections 4C1 of the Securities Exchange Act of 1934 

(“Exchange Act”) and Rule 102(e)(1)(ii) of the Commission’s Rules of Practice.2 

                                                 
1  Section 4C provides, in relevant part, that:  

 

 The Commission may censure any person, or deny, temporarily or permanently, to any person the 

privilege of appearing or practicing before the Commission in any way, if that person is found . . . 

(1) not to possess the requisite qualifications to represent others; (2) to be lacking in character or 

integrity, or to have engaged in unethical or improper professional conduct; or (3) to have willfully 

violated, or willfully aided and abetted the violation of, any provision of the securities laws or the 

rules and regulations issued thereunder. 

 
2  Rule 102(e)(1)(ii) provides, in pertinent part, that: 

 



2 

II. 
 

In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings 

herein, except as to the Commission’s jurisdiction over her and the subject matter of these 

proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Public 

Administrative Proceedings Pursuant to Section 4C of the Securities Exchange Act of 1934 and 

Rule 102(e) of the Commission’s Rules of Practice, Making Findings, and Imposing Remedial 

Sanctions (“Order”), as set forth below.   

 

III. 
 

 On the basis of this Order and Respondent’s Offer, the Commission finds3 that:  

 

A. SUMMARY 

 

1. In 2017, Crosby Independent School District and its then-CFO engaged in a 

fraudulent scheme to overstate the District’s General Fund reserves and understate payroll and 

construction liabilities totaling $11.7 million.  In January 2018, Crosby issued $20 million of 

municipal bonds.  The Official Statement attached Crosby’s fiscal year 2017 audited financial 

statements that misstated the payroll and construction liabilities.  When this misconduct was 

discovered, Crosby declared financial exigency and the bonds were downgraded.   

 

2. Lackey was the audit partner responsible for the audit of Crosby for the fiscal year 

2017.  In that capacity, Lackey failed to comply with Generally Accepted Auditing Standards 

(“GAAS”)  during the planning and performance of Crosby’s fiscal year 2017 audit.  Specifically, 

Lackey failed to perform critical audit procedures necessary to verify the accuracy of Crosby’s 

payroll and construction liability.  She (1) failed to obtain sufficient appropriate audit evidence to 

support the audit opinion; (2) failed to properly supervise the audit; and (3) failed to exercise 

professional judgment and maintain professional skepticism.  These numerous audit failures 

significantly reduced the audit team’s ability to detect Crosby’s fraud. 

 

3. Notwithstanding these audit failures, Lackey approved and issued an audit report 

for fiscal year 2017 stating that the audit was performed in accordance with generally accepted 

                                                 
 The Commission may . . . deny, temporarily or permanently, the privilege of appearing or 

practicing before it . . . to any person who is found . . . to have engaged in unethical or improper 

professional conduct. 

 

  

 
3   The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on any 

other person or entity in this or any other proceeding.  



3 

auditing standards4 (“GAAS”).  This statement was false as the audit was not performed in 

accordance with GAAS. 

 

4. As a result of this conduct, Lackey engaged in improper professional conduct 

within the meaning of Section 4C(a)(2) of the Exchange Act and Rule 102(e)(1)(ii) of the 

Commission’s Rules of Practice (“Rule 102(e)”).    

 

B. RESPONDENT 
 

5. Shelby L. Lackey, age 48, of Conroe, Texas, is a Certified Public Accountant 

(“CPA”) licensed to practice in Texas.  Lackey became a partner in a national audit firm (“Outside 

Audit Firm”) in 2017.  Lackey served as the engagement partner on, and had final audit 

responsibility over, Crosby’s fiscal year 2017 audit engagement.  In spring 2020, Lackey left the 

Outside Audit Firm to become CFO for another school district.   

 

C. OTHER RELEVANT ENTITY AND INDIVIDUAL 

 

6. Outside Audit Firm is a certified public accounting firm registered with the Public 

Company Accounting Oversight Board.  Outside Audit Firm was the auditor for Crosby’s fiscal 

year 2017 and 2018 financial statements.   

 

7. Crosby Independent School District is a public school district based in Crosby, 

Texas, a suburb located northeast of Houston, Texas.  Crosby operates seven schools and serves 

approximately 6,400 students.  Crosby operates on a July 1 to June 30 fiscal year.   

 

D. FACTS 

 

Crosby’s Deteriorating Financial Condition and Change to Fiscal Year End 

 

8. In 2013, Crosby issued $86.5 million in municipal bonds (“2013 Bond”) to fund 

several capital projects.  Various project enhancements beyond the original scope of work, 

however, inflated the total cost of the projects.  Consequently, the 2013 Bond proceeds were 

prematurely exhausted in fiscal year 2016 leaving the General Fund as the only source of funding 

for approximately $12 million of remaining construction commitments.  

 

9.  As of August 31, 2016 (Crosby’s then fiscal year-end) the District’s General Fund 

lacked sufficient funds to cover the $12 million of unanticipated construction expenses required to 

complete its capital projects.  As a result, Crosby pursued two options to pay for the remaining 

construction costs: (1) Crosby changed its fiscal year-end date from August 31 to June 30, and (2) 

Crosby issued new municipal bonds.  

 

10. Lackey, who had participated in the Crosby audits since fiscal year 2014, was the 

engagement partner for Crosby’s fiscal year 2017 audit.  She knew that the General Fund was 

                                                 
4   Generally accepted auditing standards for audits of entities not subject to the oversight authority of the 

Public Company Accounting Oversight Board (PCAOB) are promulgated by the AICPA. 



4 

liable for $12 million of remaining construction commitments, that Crosby had changed its fiscal 

year-end date, and had planned to issue new municipal bonds to pay for the additional expenses.  

The District’s inability to pay for its outstanding construction commitments and proposed remedies 

were unique issues during Crosby’s fiscal year 2017 audit and, therefore, merited an elevated level 

of scrutiny, professional judgment, and professional skepticism.  However, Lackey failed to 

perform appropriate audit procedures during the fiscal year 2017 to form a basis for the auditor’s 

opinion that the financial statements were presented fairly, in all material respects, in accordance 

with Generally Accepted Accounting Principles (“GAAP”). 

 

Audit of Crosby’s Fiscal Year 2017 Financial Statements 

 

11. Crosby’s fiscal year 2017 financial statements materially understated liabilities and 

overstated the General Fund balance due to two significant failures: (1) failure to record 

construction expenses for completed capital projects, and (2) failure to record payroll expenses for 

unpaid teachers’ salaries.  During Crosby’s fiscal year 2017 audit, Lackey failed to properly verify 

and corroborate Crosby’s construction and payroll liability.  Notwithstanding these audit 

deficiencies, Lackey approved the issuance of Crosby’s fiscal year 2017 audit report which 

contained an unmodified opinion. 

 

Construction Expenses Understated by $7.9 Million  

 

12. During Crosby’s fiscal year 2017 audit, Lackey knew or should have known that 

the 2013 Bond proceeds had been completely consumed and Crosby would have to pay the 

remaining construction commitments from its General Fund.  Lackey also knew or should have 

known that Crosby’s capital projects had been substantially completed and that Crosby’s General 

Fund lacked sufficient funds to pay the estimated $8-$10 million in unpaid construction invoices.  

On June 26, 2017, Lackey attended a call with Crosby and Crosby’s bond counsel and financial 

advisor.  On that call, Crosby and its financial advisor confirmed that the District could not pay for 

its unpaid construction liabilities without issuing new bonds.  

 

13. Lackey’s audit procedures on Crosby’s fiscal year 2017 construction expenses were 

deficient.  First, Lackey only obtained from Crosby one invoice indicating that Crosby owed 

$727,000 to its construction vendor.  Lackey, however, knew or should have known that Crosby’s 

unpaid construction liabilities were significantly higher.  Lackey also misinterpreted a critical line 

on the invoice titled “Previous Certificates for Payment” to mean total amounts paid.  Consistent 

with its description, however, that line did not represent total amounts paid but rather the aggregate 

amount of previously submitted invoices (representing actual work completed) regardless of 

Crosby’s payment history.   

 

14. Additionally, Lackey’s search for unrecorded liabilities was deficient and did not 

follow the Outside Audit Firm’s firm-wide guidance.  Lackey only reviewed a list of checks 

written, not a list of all disbursement types, such as wires and ACH payments.  If the audit team 

had searched all disbursement types for unrecorded liabilities, Lackey would have discovered $1.5 

million of progress payments toward Crosby’s outstanding construction payables in September 

2017 alone.  This amount exceeded the $727,000 recorded in the fiscal year financial statements, 



5 

which should have alerted Lackey that the construction liability was recorded incorrectly.  Lackey 

failed to corroborate and obtain an appropriate understanding of Crosby’s outstanding construction 

liabilities.  Finally, Lackey failed to verify any payments from Crosby to its construction 

contractors prior to the conclusion of fiscal year 2017.  As a result, Lackey inaccurately concluded 

that Crosby only owed $727,000 to its construction vendors as of June 30, 2017.   

 

Payroll Expenses Understated by $3.8 million 

 

15. Crosby’s teacher salaries represent a majority of the District’s expenses. Teachers 

earn their salaries over a 10-month contract period corresponding with the start and end of the 

school year, though they are paid evenly over a 12-month period ending in mid-August.  Crosby 

was not required to record a payroll liability for teacher salaries when its fiscal year-end was 

August 31 because all teacher contracts had been paid in full as of that date.  When Crosby moved 

its fiscal year-end date from August 31 to June 30, however, Crosby concluded fiscal year 2017 

with unpaid payroll liabilities related to the 2017 contract year (amounts paid in July 2017 and 

August 2017).  Crosby failed to include these unpaid payroll liabilities in its fiscal year 2017 

financial statements. 

 

16. Lackey’s audit procedures on Crosby’s fiscal year 2017 payroll expenses were 

deficient.  Crosby’s change in fiscal year-end date merited a heightened sense of scrutiny,  

professional judgment and professional skepticism.  However, Lackey failed to perform 

appropriate audit procedures over Crosby’s outstanding payroll liabilities.  First, Lackey failed to 

corroborate Crosby’s then-CFO’s alleged representation that a payroll liability for teachers’ 

salaries was unnecessary because all teachers had been paid in full as of June 30, 2017.  Second, 

Lackey failed to recognize that the CFO’s alleged representation regarding teachers’ salaries 

contradicted other audit evidence.  For example, Crosby’s payroll policies and procedures state that 

all employees’ (10-month, 11-month, and 12-month) salaries are evenly spread over 12 months (a 

common practice in the Texas public school system and well-known to Lackey).  Third, Lackey 

failed to detect the payroll liability error because of poorly designed subsequent disbursement 

testing that did not include all payment types. 

 

Crosby’s Declaration of Financial Exigency, Rating Downgrades, and Restatement 

 

17. During spring 2018, Crosby continued to face cash flow shortages because of the 

additional construction expenses described above.  In June 2018, Crosby’s new CFO discovered 

the payroll liability and construction liability errors and confronted Lackey, who was overseeing 

the audit of Crosby’s 2018 fiscal year.  Lackey admitted to the new CFO that she missed the 

payroll liabilityduring the fiscal year 2017 audit.   

 

18. In August 2018, Crosby’s leadership disclosed the financial issues to its Board and 

the public and began crafting a financial recovery plan with its financial advisor.  Beginning in 

September 2018, ratings agencies downgraded Crosby’s bonds. 

 

19. On October 8, 2018, Crosby declared a financial exigency and implemented a mid-

year reduction in force.  In February 2019, the Outside Audit Firm issued its audit report for 



6 

Crosby’s fiscal year 2018 financial statements, which included material restatements of the fiscal 

year 2017 ending balances.    

 

Failure to Obtain Sufficient Appropriate Audit Evidence 

 

20. GAAS require the auditor to design and perform audit procedures that are 

appropriate in the circumstances for the purpose of obtaining sufficient appropriate audit evidence 

(AU-C §500).  Lackey failed to obtain sufficient appropriate audit evidence during Crosby’s fiscal 

year 2017 audit in multiple areas. 

 

21. First, Lackey failed to obtain sufficient appropriate audit evidence to confirm the 

completeness and accuracy of Crosby’s fiscal year 2017 construction liabilities.  Lackey only 

reviewed one pay application from Crosby’s construction vendor and incorrectly interpreted a 

critical line item to represent the total amount due to that vendor.  Lackey also failed to adequately 

perform a search for unrecorded liabilities by only reviewing checks written rather than all 

disbursement types such as wire and ACH payments.  Finally, Lackey failed to corroborate and 

obtain an appropriate understanding of Crosby’s outstanding construction liabilities. 

 

22. Second, Lackey failed to obtain sufficient appropriate audit evidence to confirm the 

completeness and accuracy of Crosby’s fiscal year 2017 payroll accrual.  Crosby’s payroll 

expenses represent a majority of its annual budget and, therefore, should have been a primary area 

of focus during the fiscal year 2017 audit.  However, Lackey failed to corroborate Crosby’s CFO’s 

representations that contractual employees had been paid in full as of June 30, 2017.  Lackey also 

failed to detect the payroll liability error because of poorly designed subsequent disbursement 

testing that did not include all payment types.  Finally, Lackey failed to recognize and further 

investigate contradicting audit evidence between Crosby’s documented payroll procedures 

affirming annualized pay for contractual employees and the CFO’s representations that contractual 

employees had been paid in full.  

 

Failure to Properly Supervise the Audit 

 

23. GAAS require the engagement partner to take responsibility for the overall quality 

of each audit.  To comply with this requirement, the engagement partner is responsible for, among 

other things, directing, supervising and performing the audit in compliance with professional 

standards and ensuring that the auditor’s report is appropriate in the circumstances (AU-C §220). 

 

24. Lackey, in her role as engagement partner, failed to properly supervise Crosby’s 

fiscal year 2017 audit.  Lackey failed to ensure that the procedures performed by the audit team 

complied with GAAS.  For example, Lackey failed to corroborate representations by Crosby’s 

then-CFO related to Crosby’s payroll and construction liabilities.  Lackey also failed to ensure that 

the audit team properly tested Crosby’s cash disbursements subsequent to year-end to confirm the 

completeness and accuracy of Crosby’s payroll and construction liabilities. 

 

Failure to Exercise Professional Judgment and Maintain Professional Skepticism 

 



7 

25. GAAS require the auditor to exercise professional judgment and maintain 

professional skepticism during the planning and performance of an audit (AU-C §200).  

Professional skepticism is an attitude that includes a questioning mind, being alert to conditions 

that may indicate possible misstatement due to fraud or error, and a critical assessment of audit 

evidence. 

 

26. Lackey failed to exercise professional judgment and maintain professional 

skepticism during the planning and performance of Crosby’s fiscal year 2017 audit.  As previously 

discussed, Lackey failed to exercise professional judgment and maintain professional skepticism 

with respect to Crosby’s change in fiscal year-end date and deteriorating financial condition.  All 

of these issues merited a heightened sense of due professional care and professional skepticism.  

However, Lackey failed to acknowledge these areas in need of additional oversight, and she also 

failed to sufficiently perform required audit procedures.  Additionally, Lackey failed to exercise 

professional judgment and maintain professional skepticism by failing to address contradictions 

between the District’s documented payroll procedures and representations from its then-CFO that 

all contractual employees had been paid in full. 

 

E.  VIOLATIONS  

 

27. Section 4C of the Exchange Act and Rule 102(e)(1)(ii) of the Commission’s Rules 

of Practice provide, in pertinent part, that the Commission may censure or deny, temporarily or 

permanently, the privilege of appearing or practicing before the Commission to any person who is 

found by the Commission to have engaged in improper professional conduct.  Section 4C(b)(2) 

and Rule 102(e)(1)(iv)(B) define improper professional conduct to include the following two types 

of negligent conduct: (1) a single instance of highly unreasonable conduct that results in a violation 

of applicable professional standards in circumstances in which an accountant, a registered public 

accounting firm, or associated person knows, or should know, that heightened scrutiny is 

warranted; or (2) repeated instances of unreasonable conduct, each resulting in a violation of 

applicable professional standards, that indicate a lack of competence to practice before the 

Commission. 

 

28. Based on the foregoing, the Commission finds that Lackey engaged in improper 

professional conduct pursuant to Section 4C(a)(2) of the Exchange Act and Rule 102(e)(1)(ii) of 

the Commission’s Rules of Practice. 

 

F.  UNDERTAKING 

 

29. Lackey undertakes that she shall not serve as the engagement manager, engagement 

partner, or engagement quality control reviewer in connection with any audit expected to be posted 

in the MSRB’s Electronic Municipal Market Access system (“EMMA”) until reinstated to appear 

before the Commission as an independent accountant. 

 

30. In determining whether to accept the Offer, the Commission has considered 

Lackey’s undertaking. 

  



8 

IV. 

 

 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Lackey’s Offer. 

 

 Accordingly, it is hereby ORDERED, effective immediately, that: 

 

 A. Lackey is denied the privilege of appearing or practicing before the Commission as 

an accountant.   

 

B. After three years from the date of the Order, Lackey may request that the 

Commission consider her reinstatement by submitting an application to the attention of the Office 

of the Chief Accountant. 

 

C. In support of any application for reinstatement to appear and practice before the 

Commission as a preparer or reviewer, or a person responsible for the preparation or review, of 

financial statements of a public company to be filed with the Commission, other than as a member 

of an audit committee, as that term is defined in Section 3(a)(58) of the Exchange Act, Lackey 

shall submit a written statement attesting to an undertaking to have Lackey’s work reviewed by the 

independent audit committee of any public company for which Lackey works or in some other 

manner acceptable to the Commission, as long as Lackey practices before the Commission in this 

capacity and will comply with any Commission or other requirements related to the appearance 

and practice before the Commission as an accountant. 

 

D. In support of any application for reinstatement to appear and practice before the 

Commission as a member of an audit committee, as that term is defined in Section 3(a)(58) of the 

Exchange Act, as a preparer or reviewer, or as a person responsible for the preparation or review, 

of any public company’s financial statements that are filed with the Commission, Lackey shall 

submit a statement prepared by the audit committee(s) with which Lackey will be associated, 

including the following information: 

 

1. A summary of the responsibilities and duties of the specific audit committee(s) 

with which Lackey will be associated; 

 

2. A description of Lackey’s role on the specific audit committee(s) with which 

Lackey will be associated; 

 

3. A description of any policies, procedures, or controls designed to mitigate any 

potential risk to the Commission by such service;   

 

4. A description relating to the necessity of Lackey’s service on the specific audit 

committee; and 

 

5. A statement noting whether Lackey will be able to act unilaterally on behalf of 

the Audit Committee as a whole.  



9 

 

E. In support of any application for reinstatement to appear and practice before the 

Commission as an independent accountant (auditor) before the Commission, Lackey must be 

associated with a public accounting firm registered with the Public Company Accounting 

Oversight Board (the “PCAOB”) and Lackey shall submit the following additional information: 

 

1. A statement from the public accounting firm (the “Firm”) with which Lackey is 

associated, stating that the firm is registered with the PCAOB in accordance 

with the Sarbanes-Oxley Act of 2002; 

 

2. A statement from the Firm with which the Lackey is associated that the Firm 

has been inspected by the PCAOB and that the PCAOB did not identify any 

criticisms of or potential defects in the Firm’s quality control system that would 

indicate that Lackey will not receive appropriate supervision; and 

 

3. A statement from Lackey indicating that the PCAOB has taken no disciplinary 

actions against Lackey since seven (7) years prior to the date of the Order other 

than for the conduct that was the basis for the Order. 

 

F. In support of any application for reinstatement, Lackey shall provide documentation 

showing that Lackey is currently licensed as a certified public accountant (“CPA”) and that Lackey 

has resolved all other disciplinary issues with any applicable state boards of accountancy.  If 

Lackey is not currently licensed as a CPA, Lackey shall provide documentation showing that 

Lackey’s licensure is dependent upon reinstatement by the Commission.   

 

G.  In support of any application for reinstatement, Lackey shall also submit a signed 

affidavit truthfully stating, under penalty of perjury:  

 

1. That Lackey has complied with the Commission suspension Order, and with 

any related orders and undertakings, including any orders in this proceeding, or 

any related Commission proceedings, including any orders requiring payment 

of disgorgement or penalties; 

 

2. That Lackey undertakes to notify the Commission immediately in writing if any 

information submitted in support of the application for reinstatement becomes 

materially false or misleading or otherwise changes in any material way while 

the application is pending; 

 

3. That Lackey, since the entry of the Order, has not been convicted of a felony or 

a misdemeanor involving moral turpitude that would constitute a basis for a 

forthwith suspension from appearing or practicing before the Commission 

pursuant to Rule 102(e)(2);   

 

4. That Lackey, since the entry of the Order: 

 



10 

(a) has not been charged with a felony or a misdemeanor involving 

moral turpitude as set forth in Rule 102(e)(2) of the 

Commission’s Rules of Practice, except for any charge 

concerning the conduct that was the basis for the Order; 

 

(b) has not been found by the Commission or a court of the United 

States to have committed a violation of the federal securities 

laws, and has not been enjoined from violating the federal 

securities laws, except for any finding or injunction concerning 

the conduct that was the basis for the Order;   

 

(c) has not been charged by the Commission or the United States 

with a violation of the federal securities laws, except for any 

charge concerning the conduct that was the basis for the Order; 

 

(d) has not been found by a court of the United States (or any 

agency of the United States) or any state, territory, district, 

commonwealth, or possession, or any bar thereof to have 

committed an offense (civil or criminal) involving moral 

turpitude, except for any finding concerning the conduct that 

was the basis for the Order; and 

 

(e) has not been charged by the United States (or any agency of the 

United States) or any state, territory, district, commonwealth, or 

possession, civilly or criminally, with having committed an act 

of moral turpitude, except for any charge concerning the conduct 

that was the basis for the Order. 

 

5. That Lackey’s conduct is not at issue in any pending investigation of the 

Commission’s Division of Enforcement, the PCAOB’s Division of 

Enforcement and Investigations, any criminal law enforcement 

investigation, or any pending proceeding of a State Board of Accountancy, 

except to the extent that such conduct concerns that which was the basis for 

the Order. 

 

6. That Lackey has complied with any and all orders, undertakings, or other 

remedial, disciplinary, or punitive sanctions resulting from any action taken 

by any State Board of Accountancy, or other regulatory body. 

 

H.  Lackey shall also provide a detailed description of: 

 

1. Lackey’s professional history since the imposition of the Order, including  

 

(a) all job titles, responsibilities and role at any employer; 

 



11 

(b) the identification and description of any work performed for 

entities regulated by the Commission, and the persons to whom 

Lackey reported for such work; and  

 

2. Lackey’s plans for any future appearance or practice before the Commission. 

 

 I. The Commission may conduct its own investigation to determine if the foregoing 

attestations are accurate. 

 

J.    If Lackey provides the documentation and attestations required in this Order and 

the Commission (1) discovers no contrary information therein, and (2) determines that Lackey 

truthfully and accurately attested to each of the items required in Lackey’s affidavit, and the 

Commission discovers no information, including under Paragraph I, indicating that Lackey has 

violated a federal securities law, rule or regulation or rule of professional conduct applicable to 

Lackey since entry of the Order (other than by conduct underlying Lackey’s original Rule 102(e) 

suspension), then, unless the Commission determines that reinstatement would not be in the public 

interest, the Commission shall reinstate Lackey for cause shown. 

 

K. If Lackey is not able to provide the documentation and truthful and accurate 

attestations required in this Order or if the Commission has discovered contrary information, 

including under Paragraph I, the burden shall be on Lackey to provide an explanation as to the facts 

and circumstances pertaining to the matter setting forth why Lackey believes cause for 

reinstatement nonetheless exists and reinstatement would not be contrary to the public interest.  

The Commission may then, in its discretion, reinstate the Lackey for cause shown.   

 

L.  If the Commission declines to reinstate Lackey pursuant to Paragraphs J and K, it 

may, at Lackey’s request, hold a hearing to determine whether cause has been shown to permit 

Lackey to resume appearing and practicing before the Commission as an accountant. 

 

 

 By the Commission. 

 

 

 

Vanessa A. Countryman 

Secretary